Freeport-McMoRan Copper & Gold's (NYSE: FCX) ambitious goal to reduce its debt from the current $19.8 billion to $12 billion in 2016 needs robust action. Falling copper prices and continued difficulties in Indonesia put Freeport-McMoRan's plans under question despite the fact that the company stated that it could get to $14 billion debt in 2016, even with $3 copper.

Now, the first step toward debt reduction has been made. Freeport-McMoRan announced the sale of its Eagle Ford shale assets for $3.1 billion to Encana (NYSE: ECA) . Freeport-McMoRan estimates that the after-tax proceeds of this transaction will be approximately $2.5 billion. Soon after this announcement, Apache (NYSE: APA) revealed that it will sell its Lucius and Heidelberg Gulf of Mexico development projects to Freeport-McMoRan for $1.4 billion.

Logical moveFreeport-McMoRan made no secret of its desire to concentrate the oil and gas part of its business on the Gulf of Mexico. Hence, selling Eagle Ford assets looks very logical. The Gulf of Mexico assets contributed 46% of the oil and gas cash operating margin in the first quarter, while Eagle Ford assets brought 32% of the cash operating margin.

Freeport-McMoRan stated that it will use proceeds from the Eagle Ford asset sale to repay outstanding indebtedness and to invest in additional assets in the Gulf of Mexico. Taking into account Freeport-McMoRan's estimate for the Eagle Ford sale after-tax proceeds, the company will dedicate $1.1 billion to debt reduction. This will lower Freeport-McMoRan's debt to $18.7 billion.

What else can Freeport-McMoRan sell in order to lower its indebtedness? The company possesses oil assets in California, both onshore and offshore. Freeport-McMoRan also possesses assets in the gas-rich Haynesville. However, it is unlikely that the company will be pushing to find a buyer for Haynesville assets, as natural gas prices remain relatively low.

News doesn't affect the company's valuationAlthough the recent developments are significant for Freeport-McMoRan, they don't change the whole outlook for the company. Freeport-McMoRan's desire to sell some of its assets in order to reduce its debt and grow its Gulf of Mexico business was known before. The company just continued executing its strategy.

More intriguing is the solution to the company's Indonesian problems, where it suffers from a copper concentrate ban. Among recent news, Newmont Mining announced that it will ramp down production at its Batu Hijau copper and gold mine in June if it doesn't secure an export permit. The reason for this is that Batu Hijau's copper concentrate storage facilities will reach capacity in late May. This will inevitably lead to a reduction of workforce on the mine. In turn, this could force the government to speed up the export-permit process, which is favorable for Freeport-McMoRan.

Bottom lineCopper price levels, as well as the Indonesian export ban, continue to weigh on Freeport-McMoRan's shares. On the other hand, the company's shares are supported by solid operational performance, exposure to stable oil prices, and a 3.7% dividend yield. All in all, Freeport-McMoRan looks fairly valued at the moment with a chance for upside in the case of positive news from Indonesia.

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